India’s Auto Industry, stuck in a what seems to be a global slowdown for sales and growth in passenger vehicles, has fallen back on the risk of massive job losses and worse to push for a greater say in the government’s EV policy. At a time when the industry seems ill-equipped to adapt fast enough to the new wave of disruption that EV’s could potentially bring, the stance is an interesting one to watch.
The industry has some serious clout, not only due to the large ecosystem that has been built around it but also thanks to the failure of the government to give manufacturing the kick start it hoped for, in sectors other than autos.
Not just that, industry body SIAM estimates that the auto sector’s turnover accounts for close to 50% of manufacturing GDP, has created 37 million jobs and contributes 11% to the GST revenues of the country. It also supports a host of manufacturing and services industries, which have applications in many other areas. In fact, if one really considers its prospects, the truth is that in areas like defence production, the auto sector continues to be one of the few sectors with high potential for ‘Make in India’ contributions.
A statement released by leading industry body CII (Confederation of Indian Industry) last week pitches for ‘consultation’ between multiple stakeholders across the electric vehicle value chain before it firms up a plan for the transition to electric mobility. By consult, one can safely assume that the industry will push for its consistent demand for a longer transition period to EV’s, and more liberal policy for hybrid vehicles rather than pure electrics.
CII’s Sunday statement claims that it has engaged with stakeholders from industries, including renewables, electricity and power, battery makers and auto manufacturers, to create recommendations that will help India achieve its goals of lowering emissions and meet its climate change commitments
“Constructive disruptions driven by market forces coupled with enabling policies is the kernel of any innovation and we are hopeful that the same is adopted as India readies itself for the advent of new technologies in mobility including electric vehicles,” according to Vikram Kirloskar, President, CII.
CII has gone a step further and proposed a three-pronged strategy for deciding the electric mobility roadmap in India.
The government must adopt the right policies, which are seen from the macro perspective of carbon footprint and energy security, it said. Stakeholders must have a say in the targets and timelines to achieve the said goal. Possible translation: Allow fossil fuel vehicles a longer rope, with the massive refining capacity for fuels that exist, and ready access to crude supplies
The government should also be technology-agnostic in its approach as the transportation sector like any new industry segment is witnessing huge and transformative innovations both in vehicles and batteries, the statement added. Translation: Allow Hybrids to benefit from both regulations and subsidies, if at all.
“It will be constructive to allow multiple technologies as long as they are fuel efficient and meet standards of safety and quality,” Kirloskar added.
The final strategy for making the transformative mobility mission effective revolves around the affordability of customers, which will depend on market forces, CII said. It is important to look at the growth in the two-wheeler segment, which is the preferred mode of transport in rural areas and tier 2 and 3 cities. Interpretation: Just like two and three-wheelers have been faster to adopt electric options, four-wheelers need to be given more time till they to are affordable to their key buyers. Not happening currently.
The push by the leading industry body is on expected lines, considering that this is a position it has consistently held ever since the Union Minister for Transport, Mr. Nitin Gadkari, put the cat among the pigeons last year by claiming to have a target to make the country ‘100% EV driven’ by 2030 or thereabouts. It was a quote that was quickly withdrawn subsequently, with the current focus on talking about a 25% market share for EV’s by 2030 now.
However, we do believe that the conversation here could change very quickly with the next big storage breakthrough, or even if enough auto majors with global operations decide to push their global EV models in India soon enough. China has shown the way with its massive ongoing conversion to EV’s, especially its public transportation network. India, dominated as it is by a coal-powered economy and a diesel+petrol fired transportation network, is at least 3-5 years behind China right now., both in terms of EV adoption and the infrastructure it will need to work. So clearly the industry has some time to find a way, or risk being left behind.